November 22, 2017 / 10:44 PM / in 21 days

Venezuela's PDVSA in talks to supply gas to neighbors

SANTA CRUZ, Bolivia (Reuters) - Venezuelan state-run oil company PDVSA [PDVSA.UL] is in contract talks to export natural gas to neighbors Colombia, Trinidad and Tobago, and Aruba, a company official said on Wednesday.

The corporate logo of the state oil company PDVSA is seen at a gas station in Caracas, Venezuela November 16, 2017. REUTERS/Marco Bello

Gas sales could provide a welcome boost to energy revenues for a country suffering acute cash problems and in talks to restructure its debt. Venezuela, which is almost entirely dependent on crude exports, has seen income decline since oil prices crashed in 2014.

Colombia used to export gas to Venezuela through a pipeline. That flow would be reversed if an agreement with Colombia is reached on price, PDVSA’s vice president of gas, Cesar Triana, said during a gas conference in Santa Cruz, Bolivia.

Price talks between PDVSA and Colombian state-run energy firm Ecopetrol have taken a long time, Triana confirmed. The Venezuelan firm modified the pipeline in preparation to pump gas to Colombia.

“The negotiations have been hard due to current gas prices, which are very low,” Triana said.

Venezuela has vast offshore gas reserves, but they are mostly underdeveloped as the OPEC-member country has focused its investment on oil projects. PDVSA does not currently export natural gas.

Exports to Trinidad and Tobago and Aruba could not yet start as there is no infrastructure to get the gas to those countries.

If all the contracts are agreed, PDVSA could export more than 610 million cubic feet per day, about 10 percent of Venezuela’s gas output, Triana said.

Venezuela injects most of the natural gas it produces back into oilfields to help maintain pressure and crude output.

Trinidad would like Venezuelan gas to help fill its liquefied natural gas plants, which are exporting below capacity due to lack of supplies.

In Aruba, the Venezuelan gas would be used to generate power for an oil refinery operated by PDVSA’s Citgo Petroleum unit, which has not yet resumed operations after a revamp project.

PDVSA is also in talks with the government of Curacao to convert the island’s 335,000 barrel-per-day Isla refinery, which also serves as one of PDVSA’s main spots for shipping large oil tankers to Asian destinations, into a crude upgrader.

PDVSA has been operating the facility for nearly a century under a lease agreement that is set to expire in 2019. Curacao has also been in talks with China’s Guangdong Zhenrong Energy Co, which is willing to modernize and operate the refinery.

Reporting by Marianna Parraga; Editing by Simon Webb and Leslie Adler

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